The government said on Friday that the plant in Newton Aycliffe in northern England was the only secure domestic manufacturer of the semiconductors.
It said the purchase, which sources valued at 20 million pounds ($27 million), would preserve 100 skilled jobs.
While British governments rarely buy or run companies, the semiconductor sector, which makes chips for digital and industrial devices, has been a focus of late due to its critical role in the economy and national security.
Three years ago, the state intervened to prevent another Britain-based semiconductor factory, Newport Wafer Fab, being sold to a Dutch firm owned by a Chinese company.
"This government recognises the strategic importance of semiconductors as a critical technology for the future of the UK and a significant enabler of the government's growth and clean energy missions," the government said on Friday.
The Newton Aycliffe factory had been struggling over the last 12 months after losing commercial contracts. The government said it would invest in the firm, to be renamed Octric Semiconductors UK.
